Resolution of the Board

of the National Bank

of the Kyrgyz Republic

of 27 March 2024

No. 2024-П-14/13-7-(ПС)

On Amendments to the Resolution of the Board of the National Bank

of the Kyrgyz Republic "On Approval of the Regulation "On Minimum Requirements for a Settlement Bank" of 31 March 2023 No. 2023-П-14/21-2-(ПС)

In accordance with Articles 5, 9 and 64 of the Constitutional Law of the Kyrgyz Republic "On the National Bank of the Kyrgyz Republic", the Board of the National Bank of the Kyrgyz Republic resolves:

• 1. To introduce amendments to the Resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation "On Minimum Requirements for a Settlement Bank" of 31 March 2023 No. 2023-П-14/21-2-(ПС) (attached).

• 2. This resolution shall enter into force upon the expiry of 15 (fifteen) days from the day of its official publication.

• 3. To the Legal Department:

  • from the day of receipt of the relevant documents, within 3 (three) working days, to publish this resolution on the official website of the National Bank of the Kyrgyz Republic;

  • after official publication, to send this resolution to the Ministry of Justice of the Kyrgyz Republic for inclusion in the State Register of Normative Legal Acts of the Kyrgyz Republic.

• 4. To the Payment Systems Department, after official publication, within 3 (three) working days, to bring this resolution to the attention of the Legal Entity Union "Union of Banks of Kyrgyzstan", commercial banks, the Legal Entity Union "Association of Payment System Operators KG", payment organizations and payment system operators.

• 5. To the "Secretariat of the Board" Division, within 3 (three) working days, to bring this resolution to the attention of the Payment Systems Department, the Legal Department, the Banking Supervision Department, the Supervision Methodology Department, regional departments and the Representative Office of the National Bank of the Kyrgyz Republic in Batken Oblast.

• 6. To entrust control over the execution of this resolution to the member of the Board of the National Bank of the Kyrgyz Republic supervising the Payment Systems Department.

Chairman K. Bokontaev

Annex
to the Resolution of the Board of the National Bank of the Kyrgyz Republic of 27 March 2024 No. 2024-П-14/13-7-(ПС)

Amendments

to the Resolution of the Board of the National Bank of the Kyrgyz Republic

"On Approval of the Regulation "On Minimum Requirements for a Settlement Bank"

of 31 March 2023 No. 2023-П-14/21-2-(ПС)

To introduce the following amendments to the Resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Regulation "On Minimum Requirements for a Settlement Bank" of 31 March 2023 No. 2023-П-14/21-2-(ПС):

in the Regulation "On Minimum Requirements for a Settlement Bank" approved by the above-mentioned resolution:

• paragraph 2 shall be set out in the following wording:

"2. The purpose of this Regulation is to guarantee the conduct by settlement banks of final settlements for:

• payments in favor of third parties accepted by payment organizations and processed through large-value and retail payment systems;

• payments of international/local payment systems made on the territory of the Kyrgyz Republic with settlement banks/data centers of international payment systems.";

• in paragraph 3, the words "connected to an international payment system" shall be replaced by the words "connected to a local/international payment system";

• paragraph 6 shall be set out in the following wording:

"6. The settlement bank, in the cases provided for in contractual relations, shall ensure the conduct of final mutual settlements in any currencies for payments within the framework of local/international payment systems of other countries made on the territory of the Kyrgyz Republic, through the system of its correspondent accounts and on the basis of an agreement on the conduct of mutual settlements concluded with the settlement bank of a local/international payment system of another country and/or the operator of a local/international payment system of another country in accordance with the rules of the local/international payment system.";

• paragraph 9 shall be set out in the following wording:

"9. The operator of a significant payment system (hereinafter – SPS) and a systemically important payment system (hereinafter – SIPS), in addition to the main Settlement Bank, is recommended to have one or two reserve settlement banks in order to ensure continuity and uninterrupted settlements. The criteria for having one or two reserve settlement banks shall be established by the operator of the SPS/SIPS in the internal documents approved by the board of directors (in the absence of a board of directors – by the executive body) of the operator of the SPS/SIPS, based on an internal assessment of the risk to the uninterrupted functioning of the system. The risk assessment shall be coordinated with the risk manager (if any) and approved by the board of directors (in the absence of a board of directors – by the executive body). In the event of a change in the criterion of significance of a participant in the payment system to an SPS and SIPS, the participant in the payment system, within a period not later than 6 (six) months from the moment of receipt of notification from the National Bank regarding the criterion of significance, must adopt an appropriate decision on the need to have one or two reserve settlement banks. The requirements for a reserve Settlement Bank are identical to the requirements for a Settlement Bank.";

• paragraph 10 shall be set out in the following wording:

"10. The settlement bank, within the framework of contractual relations, shall ensure and guarantee the conduct of final mutual settlements in any currencies for payments within the framework of local/international payment systems of another country made on the territory of the Kyrgyz Republic, through the system of its correspondent accounts and on the basis of an agreement on the organization of settlements concluded with the settlement bank of a local/international payment system of another country and/or the operator of a local/international payment system of another country and/or the operator of a local payment system in accordance with the rules of the local payment system approved by the board of directors (in the absence of a board of directors – by the executive body), and of the local/international payment system of another country, and in accordance with the legislation of the Kyrgyz Republic.";

• supplement with item 10-1 with the following content:

“10-1. The rules of the operator of the local payment system/the Agreement between the settlement bank and the persons specified in item 3 of this Regulation must include a provision on providing the Settlement Bank with information/data on daily limits for the volume of payments conducted for all types of operations, including in the e-commerce environment of the operator of the local payment system in foreign currency, and on the nature of the operations conducted. The Settlement Bank analyzes the daily limits for the volume of payments conducted for all types of operations, including in the e-commerce environment of the operator of the local payment system in foreign currency.”;

• supplement with item 11-1 with the following content:

“11-1. All relations not stipulated by this Regulation between the operator of the local payment system and the operator of the local/international payment system of another country and their member banks and settlement banks, their liability, rights and obligations shall be established by the legislation of the Kyrgyz Republic and the corresponding rules of the local payment system and the local/international payment system of another country, the corresponding internal regulatory documents, as well as contracts and/or agreements between them.”;

• in item 13:

  • the first paragraph before the word “requirements” shall be supplemented with the word “minimum”;

  • subitem 2 shall be set out in the following wording:

“2) be a member of the international interbank financial messaging system (for example, SWIFT) and/or have with the Settlement Bank of the operator of local/international payment systems of other countries channels for the transmission of financial messages;”;

• subitem 3 shall be recognized as having lost force;

• subitem 4 shall be recognized as having lost force;

• subitem 5 shall be recognized as having lost force;

• subitem 6 shall be set out in the following wording:

“6) not be in the process of liquidation, under direct banking supervision, or under temporary administration.”;

• item 14 shall be set out in the following wording:

“14. The Settlement Bank of the operator of a local payment system integrated with the local/international payment system of another country, in addition to the requirements established in item 13 of this Regulation, must meet the following minimum requirements:

• 1) carry out banking activity on the market of the Kyrgyz Republic for at least 5 (five) years;

• 2) be a direct member of the international payment system for which it plans to become the Settlement Bank, and/or be a member of the local payment system within the framework of which an inter-system integration project with local/international payment systems of other countries has been implemented;

• 3) be a member of the Automated Trading System of the National Bank;

• 4) have correspondent relations with settlement banks/agents of operators of local/international payment systems of other countries;

• 5) have an external auditor's report confirming that accounting and reporting comply with the established accounting and financial reporting standards for the last two years.”;

• in item 15:

  • the ninth paragraph shall be set out in the following wording:

“- for payments of international/local payment systems made on the territory of the Kyrgyz Republic, carries out mutual settlements with the Settlement Bank/agent of the international payment system in any currency in accordance with the terms of contracts/agreements. In turn, receives, for the transferred funds from other participants of the local payment system, in accordance with the rules of the local payment system, reimbursement in the equivalent of the national currency through the GSRRV or in foreign currency on the basis of a concluded agreement between the Settlement Bank and the participant(s) of the system of the operator of the local payment system/payment organization;”;

• the tenth paragraph shall be set out in the following wording:

“- receives from the Settlement Bank of the local/international payment system of another country funds for operations of that payment system on the territory of the Kyrgyz Republic and ensures timely crediting of the corresponding amounts in accordance with the rules of the local payment system to the correspondent accounts of participants of that system in the National Bank through the GSRRV;”;

• in item 16:

  • the seventh paragraph shall be set out in the following wording:

“- establish tariffs not higher than the rate of tariffs in effect at the bank for settlement and cash services to legal entities and/or by agreement of the parties;”;

• in the eighth paragraph, the word “Procedure” shall be replaced with the word “procedure”;

• the tenth paragraph shall be set out in the following wording:

“- The Settlement Bank of the LPS or CLPS integrated with the local/international payment system of another country must, by agreement, provide to the operator of the local payment system/payment organization as a guarantee a portfolio of government securities or securities of the National Bank with a maturity of at least 3 (three) months (excluding the pledged portfolio) or a bank guarantee or another instrument for the timely conduct of payments and settlements of the operator of the payment system/payment organization. At the same time, the above-listed guarantee instruments in aggregate must constitute not less than the average daily value of turnovers for the integrated local/international payment system of another country with the local system of the operator of the payment system (the sum of turnovers for each day of the previous month/the number of days in the previous month when there were payments) for which service agreements with the Settlement Bank have been concluded.”.